BBTCA and the Deluce Version

The Globe and Mail reported on April 30 Robert Deluce, Porter Airlines CEO, addressed a luncheon gathering of the Empire Club in Toronto. As the club’s website says, “The Empire Club of Canada (ECC) is recognized as one of Canada’s oldest and largest, more important speaker’s forum. Our membership and speakers are comprised of some of Canada’s most influential leaders from various professions, businesses, labour, education, government, and cultural organizations”.

Mr. Deluce’s address was sponsored in part by Bombardier, assemblers of the Q400 used by Porter Airlines and the CSeries of jets that Mr. Deluce has on order. The other sponsor was Norton Rose Fulbright a firm that describes itself as “Canada’s first truly international legal practice”. It lists transport as one of its key industry sectors.

Mr. Deluce was at the Empire Club to promote the Billy Bishop Toronto Centre Airport (BBTCA) expansion. He gave his version of the expanded airport.

First, a little perspective.

The Deluce Version – Fiduciary Matters

On November 20, 2009, the Globe and Mail wrote this about Porter Airlines, “Mr. Deluce says Porter has been profitable since mid-2007 on a ‘fully allocated’ basis, though he declines to give accounting details – information that would only become public if the carrier decides to raise equity financing through an initial public offering.”

On May 21, 2010, Porter Aviation Holdings filed its prospectus with the Ontario Securities Commission through SEDAR for an initial public offering. Page 54 states,

“The Corporation incurred net losses of $4.6 million and $11.2 million for Fiscal 2009 and the four-month period ended December 31, 2008, respectively, and had an accumulated deficit of $38.5 million and a working capital deficiency of $11.8 million at December 31, 2009. At December 31, 2009, the Corporation had $20.1 million of debt that requires, beginning in December 2010, the maintenance of a minimum working capital ratio of 1:1 and a longterm debt/tangible equity ratio not exceeding 3.2:1.”

To be clear,
· for the last quarter of 2008 Porter lost $11.2 million;
· Porter lost a further $4.6 million in Fiscal 2009;
· At December 31, 2009 Porter had $20.1 million of debt.

However, on or about November 20, 2009 Mr. Deluce claimed profitability since mid-2007. A debt of $20.1 million is the Deluce version of profitability.

The Deluce Version – Runway Extensions

Mr. Deluce, in brushing off concerns about runway excursions, like the recent mishaps at Halifax and New York stated that his extension plans take longer runways into account. The implication is that longer runways at Billy Bishop Toronto Centre Airport (BBTCA) will prevent aircraft from crashing or slipping off the runway.

In both the Halifax and New York instances, the aircraft looked to have plenty of runway.

A Delta flight in New York after a runway skid

On January 15, 2009, a bird strike brought down US Airways Flight 1549

It is also Mr. Deluce’s contention that Transport Canada will soon ‘demand’ 150 metre safety areas (RESAs) which will require longer runways.

It appears Mr. Deluce isn’t aware, or if he is aware, isn’t prepared to mention a Transport Canada suggestion as to how to accommodate the 150 metre RESAs at airports that are restrained by obstacles such as bodies of water.

“When the physical space does not exist, it is possible to reduce the declared distances of the runway in order to create the space for the RESA or, in other words, to make the runway shorter for calculation purposes without making any physical change to the runway length. This change may affect an aircraft’s performance during takeoff and landing. For example, a shorter runway length may result in the need for greater engine thrust for takeoff or a reduced take-off or landing weight.”

Of course, a shorter runway length wouldn’t suit Mr. Deluce’s purpose if it restricted his current operations or put a damper on his expansion. As for Mr. Deluce’s contention that the Transport Canada’s demand will come soon, the Transportation Safety Board, the body that called for the safety areas in 2007, is still monitoring Transport Canada’s action on its seven-year-old recommendation.
As for Mr. Deluce’s opinion about the runway expanded in the future, it’s up to the city, the federal government and PortsToronto to decide. It’s not up to Mr. Deluce. As U.S. Senator Daniel Patrick Moynihan so aptly stated, “Everyone is entitled to his own opinion, but not his own facts.”

The Deluce Version – Marine Exclusion Zones

Marine Exclusion Zones (MEZs) are the watercraft keep-out at the ends of the runways. City Council, in its vote on April 1, 2014, made quite clear that runway expansion was a non-starter if expansion of the MEZs materially impacted current boating activity.

In the Deluce version, Mr. Deluce said the new runways would mean only minor changes to the zone and would have “no material impact on boating.”

TAO observes that for the harbour, “This Obstacle Limitation Surface would also influence the route of some of the Toronto ferries. The members of the Island Yacht Club, located on Mugg’s Island, would have to make an extensive
diversion around the OLS to use the Western Gap.”

At the western lake side of the harbour, boats exiting and entering the Western Gap will be restricted to an approximately 55 metre wide passage way where the OLS meets the Ontario place seawall. The report goes on to question the manoeuvrability of a jet in difficulty so close to watercraft in the passage way.

There may be, of course, the danger that expansion proponents will deny in theory, as Mr. Deluce does, that watercraft will suffer any material impact in order to the get City Council to OK their proposal only to find out in practice that boating in the harbour and through the Western Gap will be severely restricted in the name of safety. Only then it be too late.

The Deluce Version

From his take on Porter’s financial situation, to his version of the runway lengthening, to his account of the MEZs, it is easy to see why Mr. Deluce might want to push his own version of the facts. After all, to admit to a larger picture with contrary evidence might restrict his ability to strike it richer with runway expansion.

However, it would not be so easy to see why city councillors would buy Mr. Deluce’s facts without getting the full story from other sources.